The Government must decide whether to accept a NZ Super Fund offer to build, fund and own Auckland's light rail project

The Government must decide whether to accept a NZ Super Fund offer to build, fund and own Auckland's light rail project

The NZ Transport Agency’s (NZTA) business case for the Auckland’s light rail project has been delayed by the Government reviewing an offer from the NZ Super Fund to fund, design, build and operate it.

The NZTA’s final business case for the Auckland light rail project was supposed to be delivered at the end of last year, but it's still a work in progress.

The report is expected to set out how the procurement process will be handled, whether the development is affordable and a management plan to ensure the project is a success. It would also need to include an analyses of opportunities for more cost effective solutions and set out how the various implementation risks would be managed.

The NZ Super Fund approached the Government in May last year with an offer to design, build and operate Auckland’s light rail network with Canada's CDPQ Infra, which is currently developing and building the Montreal light rail network. CDPQ was established in 1965 and manages US$238 billion in funds from a number of Canadian based pension and insurance schemes.

In October NZ Super Fund CEO Matt Whineray told that the NZTA was deciding on what type of procurement model it wanted to use. He said the NZ Super Fund had proposed what it called a public-public investment (PPI) model, as opposed to a public-private partnership (PPP).

“That's where we would partner with whichever the government body is, it could be NZTA, it could be another ministry, and really develop the project.”

NZ Super Fund, along with CDPQ Infra, would provide capital to fund the rail development and then retain long-term ownership over the light rail network.

But according to the NZ Transport Agency’s (NZTA) head of light rail Carl Devlin, it can’t finalise its business case for the project until Transport Minister Phil Twyford and co. finish their deliberations.

He says an early draft business case from the NZTA for the CBD to Mangere light rail line has already been forwarded to the Ministry of Transport (MOT) for review. But Devlin says further work, including more detailed costings will need to be carried out before the business case is finalised.

Devlin says the MOT and Treasury have completed their reviews of the NZ Super Fund (NZSF) and CDPQ Infra proposal and they have now been forwarded to the ministers involved. But now it’s a waiting game.

Under the project proposal first outlined by Twyford in 2017 two light rail lines would be established in Auckland. One leading from downtown Auckland out to the airport at Mangere, while a second line would run from the central city along State Highway 16 to Kumeu/Huapai.

Twyford has estimated that the Auckland that project would cost about $6 billion, making it the biggest transport project in New Zealand history.

The NZTA is leading the development of the Auckland light rail programme with the support of partners, Auckland Council, Auckland Transport (AT) and HLC, a wholly owned development subsidiary of Housing NZ.

A spokesperson for Twyford says an investigation into the feasibility of a northwest line is still in its early stages, but the Government remains committed to the idea.

However, according to NZTA other short term interim options such as a bus way are being considered as “further work needs to be undertaken to develop a business case” for the northwest light rail line.

An NZTA spokesperson says they can’t confirm or deny whether the Government or the agency have received any other offers to build and/or operate the light rail project.

But they say it's standard procedure with such public projects is the business case would be completed and signed off by the board before going to the minister for approval. A competitive tendering process would then take place to decide who would build the project.  

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Reading back from the links, it's clear that the Montreal project has morphed as cruel reality strikes:

  • Stations dropped
  • Costs increased
  • Elevated tracks substituted for tunnels
  • Pax revenue projected to be less than half the running costs

Lisa Mintz, a co-founder of the Trainsparence grassroots group that is opposing the project, said the project is being rushed through without proper consultation or planning.

“This project is changing all the time,” said Mintz, whose group is trying to get a court order to stop the project, claiming there has not been proper public consultation. “Why is everyone so happy about (the project) when it needs to be drastically changed all the time? This is a matter where no one wants to say that the emperor has no clothes.”

(And, DC, can you please advise what HTML tags now work? I've used href and blockquote in the comment without any idea whether they still are seen and acted upon).

Update - Thanks, DC. Tags are working. Yum...

the government need to step back and let private enterprise take over,
it is just plain stupid to run from the city to the airport through mt roskill
it needs to link between rail and bus
ie run the tram from puhinui rail to the airport and around the airport oaks
run trams across the city in shorter runs connecting with rail
run up the main routes, new north road, great south road, manukau road, mt eden road
look at new tech, wireless with quick recharging at stops

Won't solve bus congestion issues in the CBD or Dominion Rd, which do not have any capacity to handle the projected growth.

Autonomous vehicles will make commuter rail obsolete within 5-10 years. High frequency and more responsive taxis, minibuses and buses will take their place. You can buy level 3 autonomous (Teslas) as of this month: with level 4-5 likely to come in next 2 years. Put it quad-bike sized micro cars/taxis that can double the road-capacity and you don't need public transport anymore. Please stop this insanely expensive train fiasco before it gets started.

More people should take note of your point

If autonomous vehicles come to NZ (and I think the tech is years away) then we will urgently need congestion road pricing to stop city roads from being clogged up with zero occupant autonomous vehicles circling around whilst they wait for fare paying riders.

yes - in fact we need it now - no need to wait until autonomous vehicles arrive ...

I wouldn't rely too heavily on the Tesla hype, some who pre-paid for the software are now looking for refunds. Fully autonomous vehicles on congested public roads are years away.

NZTA, the NZ Super Fund and the government need to be looking at how Tokyo's private rail companies provide high quality rail infrastructure without being subsidised by the tax payer. They should be thinking about how their light rail procurement model can create a NZ version of that model.

The government is unethical and morally bankrupt to be considering funding a light rail system that will never turn a profit ahead of road safety.

$6 billion would be far better spent (& would have an economic return) on implementing "vision zero" on our very poor roading network and reducing the slaughter of 380 people a year and the thousands injured. $6 billion would go a long way to providing the critical components of a 2+1 median divided state highway system across the network.

It is also perverse that the superfund is seeking to fund the infrastructure. Taxpayer funds superfund, superfund funds light rail, taxpayer (& maybe road user) further funds the superfund for a loss making, feel good, single light rail corridor.

There are also a number of strategic issues with the proposed light rail
a) Auckland doesnt yet have congestion tolls to push people onto the proposed light rail
b) Road users are subsidised by ratepayers, making it easier to stay in the car
c) carbon prices are still very low
d) there is no high density around the proposed light rail stations, let alone the exiting heavy rail network
e) the operating speed of the proposed light rail system is low, it is not rapid transit.
f) as a strategic alternative travel path (say the main rail line is blocked) the path along the light rail alignment requires 3 mode changes - heavy rail to bus "rapid" transit to light rail.

Good post, and the Super Fund get to mark the value of the project wherever necessary to hit their returns. You can bet there will be ultra long-dated and lucrative pricing and leases included - which can be on-sold in the future.

We do have a congestion tax, it's the time stuck in traffic. Time is the one thing people can't make more of, but the thing people in the central city are happy for people out West to lose if it means they get to keep their precious villas, while West Auckland bursts at the seams.